Like the population at large, the U.S. business sector is getting "old and fat," a new report from the Brookings Institution said.

Despite the attention lavished on startups, the study found that older companies have come to account for a larger and larger share of economic activity and employment over the past 20 years.

Firms that are 16 years or older made up 34 percent of all U.S. companies in 2011, up from 23 percent in 1992, it said.

"The share of private-sector workers employed in these mature firms increased from 60 percent to 72 percent during the same period," the report added. Meanwhile, there were "steady declines in the share of firms at every other age category."

A major factor behind the graying of U.S. business is a long-term decline in entrepreneurship, the authors wrote.

They found that the rate of new business formations declined significantly over the past three decades in every state and nearly every metropolitan area. The only city that saw an increase was McAllen, Texas, where the rate of new business formations increased 3 percent between 1978-80 and 2009-11.

Even in the Bay Area - where the dumbest of ideas can often get funded - there were sharp declines in the rate of new business formations. They fell by 47 percent in the San Francisco-Oakland-Fremont area over the same period, and by 52 percent in the San Jose-Santa Clara metro area, according to data released this year by the study's authors.

The study released last week ended in 2011, the depths of the recession, and might have missed a recent upsurge in startups. "There has probably been a partial reversal of the trend since 2011 or 2012," especially in the Bay Area, says Robert Litan, a nonresident senior fellow at Brookings who co-authored the report with Ian Hathaway of Ennsyte Economics.

But even if there was a "modest uptick," it was not nearly enough to reverse the 20-year slowdown in business formations, Litan says.

The aging of American business is disturbing because an economy that is saturated with older firms "is likely to be less flexible, and potentially less productive and less innovative than an economy with a higher percentage of new and young firms," the authors wrote.

Litan has two theories why the last two decades have been tough on entrepreneurs. One is the "cumulative weight of regulation, not just federal, but state and local. If you add the cumulative weight, over 30 years, it's like a mountain growing higher. I think that tilts it (the balance) away from startups toward older companies."

The other is the fact that Americans are getting older.

"The peak ages for successful entrepreneurship are late 30s and early 40s. With fewer people in that age cohort," you have fewer successful startups, Litan says.

One solution, the authors said, is to expand the numbers of immigrant entrepreneurs granted permanent work visas to enter and remain in the United States. Another is to let foreign students who majored in science, technology, engineering or math in U.S. colleges remain in the country on green cards, given the fact that immigrants are more likely to launch businesses than people born here.

LinkedIn paying OT

LinkedIn Corp. paid almost $6 million in back overtime wages and damages to 359 current and former employees in California, Illinois, Nebraska and New York after a U.S. Department of Labor investigation found it violated the overtime and record-keeping provisions of the Fair Labor Standards Act.

The law requires that covered, non-exempt employees be paid for all hours worked, plus time and a half for hours worked beyond 40 per week.

Sources within the department who agreed to speak anonymously said the investigation focused on LinkedIn employees in marketing, recruiting, talent and sales who - based on their duties - should have been eligible for overtime pay but were classified as exempt from overtime. Because they were exempt, LinkedIn did not track their hours. But based on interviews with several employees, the investigators found that on average, they worked about five hours per week of overtime.

Employers who violate the law are generally required to pay employees back wages and an equal amount in liquidated damages. LinkedIn paid about $3.3 million in back wages and $2.5 million in liquidated damages and agreed to provide compliance training and make sure non-exempt employees and their managers understand the law.

The Labor Department can reduce liquidated damages if a company has a good faith defense for not complying with the law, such as advice from a lawyer or accountant. The department would not say why it reduced liquidated damages in this situation.

Workers who were misclassified received anywhere from $270 to $34,127 in back pay and damages based on their rate of pay and length of employment. The median payment was $11,824.

A spokesman for the social network for professionals said in an e-mail, "This was a function of not having the right tools in place for a small subset of our sales force to track hours properly; prior to the DoL approaching us, we had already begun to remedy this. LinkedIn has made every effort possible to ensure each impacted employee has been made whole."

For more information about the federal wage laws, employees can call the Labor Department's wage and hour division's toll-free helpline at (866) 487-9243 or visit www.dol.gov/whd.